Dems float $500M transportation plan

Wednesday

Apr 3, 2013 at 6:00 AMApr 3, 2013 at 3:45 PM

By John J. Monahan TELEGRAM & GAZETTE STAFF

House and Senate Democratic leaders have settled on a 3 cents per gallon hike in the state gas tax, a $1 per pack hike in cigarette taxes and expansion of the income tax to cover computer design services, but Republicans are arguing those tax hikes are not needed.

The tax package outlined Tuesday by House Speaker Robert A. DeLeo, D-Winthrop, and Senate President Therese Murray, D-Plymouth, is aimed at raising about $500 million in new revenue to close a chronic MBTA operating deficit, fund new transportation initiatives and provide more funds for regional transit authorities and local road maintenance.

Both legislative leaders said the revenue increases will mean no hike in fares on the MBTA and commuter rail service for the next year and no additional tax increases in the 2014 budget.

They said their plan was an alternative to the transportation elements included in Gov. Deval L. Patrick’s $1.9 billion tax hike proposal aimed largely at boosting transportation spending, lowering state college costs and expanding early education programs.

While the governor had sought more than $800 million in new revenues for transportation alone, the legislative agreement would provide just over half that amount in new funding for transportation, including an increase in Chapter 90 funding for local road projects from $200 million to $300 million.

The governor had proposed a hike in the income tax rate from 5.25 percent to 6.25 percent and a cut in the sales tax from 6.25 percent to 4.5 percent. The legislative plan also changes the tax status of utility companies to raise $83 million. The cigarette tax hike would raise $165 million. The gas tax from 21 cents per gallon (not including the 2.5-cents per gallon underground tank storage fee) to 24 cents per gallon, would raise $110 million. The new tax on computer software design services would raise $161 million.

Mr. DeLeo said the plan, which calls for no changes to the state’s sales and income tax rates, was needed “to keep and grow jobs in Massachusetts.” He added, “Massachusetts is still struggling to emerge from the economic downturn.”

The new revenues, he said, will allow the state to put 1,800 state highway workers now paid with borrowed bond funds on the state’s regular payroll over three years, fill an annual $150 million MBTA operating budget deficit and boost funds for regional transit authorities. The Democrats’ plan also calls for continued tolling on the Western Turnpike with funds going to transportation projects.

Ms. Murray said workers saw an increase in their federal payroll taxes this year and higher property taxes over the last five years, explaining the decision to reject broad-based tax hikes. “We don’t believe we can further squeeze the middle class,” she said.

Since the governor announced his proposals earlier this year — which also call for extending the sales tax to candy and soda and boosting cigarette taxes by $1 per pack — some House and Senate leaders have expressed worry that a tax hike of the size sought by the governor would jeopardize Democratic chances of holding onto the governor’s office in 2014.

House Republicans are set to offer their own transportation funding plan that does not rely on any new taxes, but would cover the MBTA deficit, provide forward funding for regional transit authorities and eliminate tolls on the Western Turnpike from Weston to the New York state line in 2017.

State Rep. George N. Peterson Jr., R-Grafton, said the Democrats’ plan would impose five new taxes, including the gas tax increase. The GOP plan, he said, would rely on using about one quarter of the $840 million in anticipated new revenues in the state from economic growth next year, to provide about $170 million to fill the immediate gap in transportation funding.. He said that would grow to about $500 million annually in three years.

“People I have talked to think they are living with less and the state continues to spend more and more,” Mr. Peterson said. “I admit we have to reprioritize our dollars, but using their revenue estimates they will have $840 million more without any new taxes next year.

“I can’t wait for this debate because I think we have an alternative,” Mr. Peterson said.

House leaders expect two bills, one to approve an increase from $200 million to $300 million for local road projects and another to impose the new taxes, may go before the House next week in advance of 2014 budget deliberations.

He said he would review their plans but asserted he still believes more funding will be needed for transportation and education needs. “My principles continue to be whether the financing is enough, dedicated and fair and I will review the Legislature’s proposal in that light,” he said.

Senate Ways and Means Committee Chairman Stephen M. Brewer, D-Barre, said he calculated there was a need to fill a $255 million gap in transportation funding for 2014 and that the Senate plan would fill a gap growing over the next four years that will require a total of $2.28 billion in new revenue.

Besides the higher gas tax revenues that Mr. Brewer said would cost the typical motorist about $30 a year starting July 1, the plan calls for dedication of the motor vehicle sales tax revenues to transportation needs and an annual adjustment in the gas tax at the rate of inflation.

Mr. Brewer said the plan will close the current transportation funding gap over the next three years.

State Sen. Harriette L. Chandler, D-Worcester, co-chairman of the Legislature’s regional transit caucus, said the House-Senate plan would raise about half of what the governor wanted for transportation. “But it is a doable plan and I think it takes care of both the T and the RTAs,” she said.

The plan would provide so-called “forward funding” to regional transit systems like the Worcester Regional Transit Authority to provide operating funds at the start of the fiscal year, instead of the current reimbursement system for state operating costs that force RTAs to pay interest costs financing their operations each year.

“Central Massachusetts needs public transportation and this gives it to them,” Ms. Chandler said. She said it will curb the need for commuter rail fare hikes and provide a more stable funding plan for regional transit authorities that have been hurt by rising costs and limited revenues in recent years.

The agreement between the House and Senate Democrats also sets aside a smaller income tax hike from 5.25 percent to 5.95 percent proposed by State Rep. James J. O’Day, D-West Boylston, that had been gathering support as a cheaper alternative to the governor’s larger tax hike.

State Rep. Mary Keefe, D-Worcester, said she would prefer higher revenues for next year. “I’m disappointed that we weren’t looking at the income tax and a more progressive way of raising revenue. The gas tax always is a hard pill to swallow for those of us that live in Central Massachusetts and drive more and don’t have public transportation as an option,” Ms. Keefe said.